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Practice Management > Building Your Business > Young Professionals

ADP Survey Highlights Lack of Understanding About Employee Benefit Plans

By Warren S. Hersch

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HR professionals believe that 4 in 10 employees do not fully understand their company benefit plans, according to a new survey.

ADP Research Institute, Roseland, N.J., a unit of Automatic Data Processing, Inc. (Nasdaq: ADP), published this finding in the latest release of its ADP HR/Benefits Pulse Survey. The quarterly report polled 501 private sector HR decision-makers online in July about issues and trends respecting the communication of employee benefits.

According to the survey, 80% of HR decision-makers believe that employees must fully understand their benefit options, yet these professionals estimate that only about 60% of their own employees do.

More than a third (36%) of large employers and nearly two-thirds of midsized firms (66%) do not have an employee communications budget related to their benefit plan, the survey says.

These percentages are unlikely to change near-term, the report adds, because HR decision-makers at about half of companies say their budget has remained the same in the past year. And only a minority expect it to increase in the next one or two years.

Of companies with a budget, HR decision-makers in about half of large and midsized companies (47% and 53%, respectively) say their budgets have remained the same in the last year. 

More than half of HR decision-makers in both large (57%) and midsized companies (63%) also say they are likely to maintain their employee communications budgets in the next one or two years. And only one in five (21%) of both groups plan to increase their budget.

The majority of HR respondents believe that decision support tools increase employee understanding of benefits and their engagement, yet the majority of large (51%) and midsized companies (72%) don’t provide them. Decision support tools, typically software applications accessed through a company portal, let employees compare healthcare plans to determine which ones best meet their needs.

Approximately half of large (53%) and midsized companies (50%) offer these tools the entire year. About one-quarter of large companies (23%) and one-third (33%) of midsized companies only provide them during open enrollment and qualified life events.

Among the companies that provide decision support tools, the most common ones reported are a flexible spending account (FSA) calculator, a plan comparison chart, a medical cost calculator, and wellness incentive modeling, the report says. 

One out of five large companies that do not provide decision support tools plan to in the next couple of years, but half (49%) will not and about a third (31%) are unsure. A small minority (13%) of midsized companies that do not provide decision support tools plan to do so in the next year or two, 38% will not, and almost half (49%) are unsure of what they will do, the survey finds.

More information on the survey can be found here.

Employee Benefits Communication Spending in Past Year

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